EUR/USD Daily Fundamental Forecast – January 26, 2018

It was a highly volatile day for the euro yesterday with the prices whipsawing this way and that during the course of the day. The result of all that has been the fact that the prices are back at the same place where they were in 24 hours earlier and it now has become an almost equal battle between the bulls and the bears in this time and it remains to be seen who will get an upper hand now.

EURUSD Has a Round Trip

The day began with the euro continuing its bullish run with the dollar suffering from the comments from the US Treasury Secretary who said that he liked a weaker dollar. The market was also waiting in anticipation for Draghi to make his press conference later in the day and a part of the market was expecting him to talk down the euro as it felt that the ECB would be uncomfortable with the quick and unfettered rise of the euro against the other currencies, especially the dollar. But he did not sound overly dovish in his press conference though he expressed his concerns that growth could be affected by the higher FX rates. This was not enough dovishness for the traders and they began to push the euro higher as it rocketed through the 1.25 region and it seemed that it would only be a matter of time before it went towards 1.26.

But that progress was stopped later in the day as Trump sought to play down the speech by the US treasury secretary by saying that the dollar was bound to get stronger due to the strong economic data. This basically led to a reversal of the entire move upwards in the euro and finally we have the pair trading just above the 1.24 region as of this writing.

Looking ahead to the rest of the day, we do not have any major news from the Eurozone but we have the advance GDP data from the US which should bring in some volatility. If the data comes out stronger, this along with the related statement from Trump, could help to bring in some strength to the dollar which should ensure a strong weekly finish for the currency.